European Banks: What's Going On?

[KukriKhan]

Once again, Ireland sets the agenda for the EU and watches the so-called great powers scramble to keep up.

To be sure, we'll be buying anything ye have to hand. After all, we have all those leprechauns and their pots of gold underpinning our fiscal policy - which is more than can be said for Sarkozy's Grand Unified European Policy - which doesn't exist, unlike the leprechauns.

To answer your question Kukri, what you are seeing is the equivalent of the panic on the Titanic post-iceberg - everyone for themselves, and women and children be damned, whilst a couple of leaders are still trying to conduct the orchestra.

OK. So: there was/is an iceberg, though? I'd got the impression previously, that Europe (+UK & Ireland) were pretty-well insulated.

[Banquo's Ghost]

OK. So: there was/is an iceberg, though? I'd got the impression previously, that Europe (+UK & Ireland) were pretty-well insulated.

Oh no. Believe me, we can be just as avaricious as you guys; we just smile politely when picking your pockets.

Just watch Iceland sink.

[Oleander Ardens]

Many European Banks are too overleveraged (35:1 is not unusual), but fortunatly for them most are universal banks. Fortis, Hypo Real Estate are somewhat different and with a great need for short-term credit to refinance they have been in big trouble. The TED spread (the difference between 3M LIBOR and 3M US TB) rose from 0,5% around 2006 to nothing short of 5% in the last days. I think this shows us how riskaverse every bank has become now - after forgetting completely about riskmanagement in the last 4 years.

Still the European economy is overall in far better shape than the American. Given stocks here lost even more than the DJ things look a little bit crazy here. Europeans have usually far higher savings than their US counterparts and have cut back spending not as heavily.